CoCaTax Menu

CoCaTax?

CoCaTax is a micro-simulation model for the ex-ante evaluation of fiscal reforms w.r.t. company cars and company mobility. It is primarily a didactic tool to distentangle the various effects of such fiscal reforms for a broad variety of households and for the different public authorities.

How to use CoCaTax?

Use the general menu at the top of the page to navigate between the main parts of CoCaTax. In the 'input' section, you can change various parameters of the fiscal system w.r.t. company cars. Those parameters that you do not change remain at their current value in the actual fiscal system. After changing the parameters, click on the 'simulate' button. CoCaTax then computes the impact of the fiscal system before and after your chosen reform for each individual in a representative sample of the Belgian population, and presents an extensive analysis and visualisation of the results in the 'output' section of this application. More information about the fiscal system and CoCaTax can be found in the 'documents' section.

Quick-start videos

Watch one of the following quick-start videos to get started. Choose between English, French and Dutch. Read the user manual and longread articles in the documents section of this interface for a broader introduction.

English

Quick-start video in English

Français

Quick-start vidéo en français

Nederlands

Quick-start filmpje in het Nederlands

Disclaimer & Help

More information about the strengths and weaknesses of CoCaTax can be found in the documents section of this online interface. Please read our most recent disclaimer to find out about the various limitations of the current version of CoCaTax, before using its results for research, policy, communication or other objectives.

BSI Chair on Company Mobility

CoCaTax was built for the Brussels Studies Institute (BSI) Chair on Company Mobility. Mobility definitely constitutes one of the biggest contemporary societal challenges. Therefore, eleven organisations/interest groups each provided a budget to be managed by Brussels Studies Institute (BSI) in the context of an academic research chair. The aim of this interuniversity research chair is to generate a broad, scientifically substantiated approach of (company) mobility based on cross-community and multidisciplinary academic research (focusing on different geographic scales and cases, with a particular interest in the Brussels metropolitan area).

More information

Click Simulate to run CoCaTax

Click Reset to reset parameters to reference (actual) policy

Recent reforms: 'Cash-for-car' and the 'Mobility budget'.

CoCaTax allows the user to test the impact of three different scenarios:

the scenario 'business as usual' (BAU), in which cash for car and mobility budget are not available

the scenario 'cash for car' (CFC), in which cash for car is available

the scenario 'cash for car and mobility budget' (MB), in which both cash for car and mobility budget are available.

Can be set to 'business as usual', 'cash for car' or 'mobility budget (=cash for car and mobility budget)'

Cash for cars

With cash for car, employees renounce to their company car in exchange of an additional monetary remuneration, the mobility allowance. The latter benefits from a favourable fiscal and social treatment, similar to the one that prevails for company cars. Cash for car requires both the employer and the employee to agree. The motivations behind this reform are to remove the distortions at play in modal choices and to reduce negative externalities.

A first step in CoCaTax is to determine the probability that a given company car owner switches to cash for car. When they opt for cash for car, workers get rid of their company car and get a mobility allowance instead:

Mobility allowance = Catalog value * Fiscal coefficient * Cash for car coefficient

The catalog value is the market value of a new vehicle of the corresponding model. Note that the cash for car coefficient can take two different values, depending on whether a fuel card is provided or not. As can be seen in the formula displayed below, the taxable fringe benefit is not necessarily equal to the mobility allowance:

Fringe benefit = Catalog value * Fiscal coefficient * Taxation coefficient

It is also worth noting that CoCaTax allows the user to specify the rate at which the mobility allowance can be deducted from the corporate income tax base.

Mobility budget

The mobility budget is an alternative form of remuneration to company car provision. It contains three pillars: the provision of a (cheaper) company car, a budget allocated to sustainable modes of transport (public transport, electric bike, etc.), and a monetary remuneration. The main motivation behind this reform is to trigger a modal shift from car use to public transport and active modes.

In terms of tax treatment: 1) the company car fringe benefit in itself is computed as in the absence of a mobility budget; 2) the share of the mobility budget that is allocated to sustainable modes of transport is completely exempt from personal income tax and social contributions; 3) the residual mobility budget that is paid in cash is exempt from personal income tax but not from social contributions.

To start with, CoCaTax users need to specify the probability that a given company car owner switches to a mobility budget (pay attention to the fact that the sum of this probability and the probability to switch to cash for car cannot exceed one). It is then necessary to determine the probability that a mobility budget beneficiary keeps a (cheaper) company car as part of his or her remuneration. For mobility budget beneficiaries that keep a company car, it is necessary to determine the catalog value of the latter:

Catalog value MB = Catalog value BAU * Price coefficient

The price coefficient is different for each individual. It is drawn from a uniform distribution whose minimum and maximum values are set by the CoCaTax user. Note that the vehicle cost is computed in a similar way. The residual mobility budget can be:

fully allocated to sustainable modes of transport (with probability p full);

partly allocated to sustainable modes of transport and partly to a monetary remuneration (with probability p partial);

fully allocated to a monetary remuneration (with the residual probability).

Note that when the mobility budget is partly allocated to sustainable modes of transport and partly to a monetary remuneration, the exact share of the residual mobility budget that is allocated to sustainable modes of transport is drawn from a uniform distribution whose minimum value is 0% and maximum value is 100%.

Behavior

Choose the proclivity of company car users to trade in their company car for a cash for car allowance and the proclivity to trade in their company car for a mobility budget.

Share of company car users switching to cash for car

Cash for Cars

Choose the parameters defining the fiscal treatment of 'Cash for cars'

Coefficient of the adjusted catalogue value that an employee can receive on a yearly basis as cash for car for a company car without fuel card.

Coefficient of the adjusted catalogue value that an employee can receive on a yearly basis as cash for car for a company car with fuel card.

Coefficient used to determine the tax value of cash for car fringe benefit for personal income tax .

Deductibility rate applied to the cash for car benefit for the corporate income tax.

Behavior mobility budget

Choose the behavioural reactions to a mobility budget.

Share of company car users trading in their company car for a mobility budget

Note: the sum of the fraction of company car users switching to 'Cash for Cars' and the fraction of company cars users switching to a mobility budget should not exceed 1.

Share of mobility budget users that keep on using a (potentially smaller) company car

By lack of behavioural data, CoCaTax assumes that mobility budget users will scale down their company car to a random fraction of the original company car. Determine the upper and lower limit for this uniformly distributed coefficient, drawn separately for each individual.

Highest fraction of the catalogue value of the original company car still spent on a company car in the mobility budget

Smallest fraction of the catalogue value of the original company car still spent on a company car in the mobility budget

Finally, we need to determine how the share of the mobility budget that is left - after (possibly) spending a part on a company car - will be used. Users can spend their entire budget on sustainable transport modes (train, bus, tram, bicycle, e-bikes...)

Share of mobility budget users spending their entire remaining budget on sustainable transport

Share of mobility budget users who spend a part of the remaining budget on sustainable transport, and who receive the rest in cash.

Note that the two above fractions should not exceed 1. The rest of the mobility budget users will receive their remaining budget only in cash.

The tax value of fringe benefits

In-kind income or 'fringe benefits' are a form of income by definition, and therefore subjected to the personal income tax. To this end, it is necessary to estimate its monetary value in order to add it to the taxable income. The formula for the tax value of a company car is displayed below:
Company car fringe benefit = Catalog value * Fiscal coefficient * Age coefficient * CO ₂ coefficient.
The catalogue value is the market value of a new vehicle of the corresponding model. The age coefficient depends on vehicle age. The CO ₂ coefficient depends on fuel type and CO ₂ emissions (expressed in g/km):
CO ₂ coefficient = Base coefficient + Slope coefficient * (CO ₂ emissions - Reference level of CO ₂ emissions)
The reference level of CO2 emissions is different for each fuel type. The CO2 coefficient must be comprised between a minimum and a maximum value. For electric vehicles, the CO2 coefficient takes the minimum possible value. The tax value of the company car should not fall short of a legally imposed minimum.

Fiscal coefficient

Choose fringe benefit fiscal coefficient

Fiscal coefficient

Minimum

Choose minimal fringe benefit to declare by a full year user of a company car

Minimal fringe benefit reported

Age coefficients

Choose fiscal treatment of company cars in function of age

Rate 0-1 year

Rate 1-2 years

Rate 2-3 years

Rate 3-4 years

Rate 4-5 years

Rate more than 5 years

CO2 coefficients

Choose parameters fiscal treatment in function of CO2 emissions

Base coefficient

CO2 minimum level

CO2 maximum level

CO2 slope

CO2 reference levels

Choose parameters fiscal treatment in function of fuel type

Diesel

Gasoline

LPG

CNG

Electric vehicles

Defaults

Choose a reference value if the emissions of the vehicle are not certified

Diesel

Gasoline

LPG

CNG

Electric Vehicles

Personal income tax: establishing the tax base

Deduction business expenses

Business expenses can be deducted from the taxable labor income. In practice, they are often computed on a lump sum basis, according to both job type and (taxable) labor income. For each job type (worker or company manager/self-employed), the deduction for business expenses is computed in CoCaTax as the minimum of the following two values: the deduction rate times the taxable labor income or the maximal deduction.

Deduction professional expenses: choose the rate at which professional expenses can be deducted, and the maximal deduction, for workers and managers.

Rate at which workers can deduct professional expenses

Maximal deduction for professional expenses of workers

Rate at which workers can deduct professional expenses

Maximal deduction for professional expenses of workers

Personal income tax: tax calculation

Once the taxable income is established, the most important elements of the personal income tax (PIT) calculation are the application of the progressive rate structure, the calculation of the reduction related to the zero-rate band, the division of the PIT revenue between the federal and regional levels and the application of diverse regional and federal tax reductions and tax credits, tax increases and local surcharges.

The progressive rate structure is implemented by dividing the taxable income in different income brackets, and then applying a different tax rate to each income bracket, typically the lowest rate to the lowest income brackets, and increasingly higher tax rates to higher income brackets. In the interface below, the user can fix the boundaries of the income brackets, change the associated tax rates and add an additional bracket if desired (to reduce the number of brackets, simply set an identical tax rate for two or more income brackets). A part of non-labor taxable income is taxed distinctly, such that the tax rate does not vary with taxable income, but that taxation is proportional.

A first taxable income bracket or 'zero-rate band' is untaxed. The size zero rate band depends on the socio-economic situation of the citizen: income, the number of children or other dependent persons, handicaps, single parenthood etc. To avoid working with a rate structure that has to be tailored to the individual situation, the state applies the above rate structure to all taxable income, and then gives back the taxes due on the zero-rate band as a tax reduction. Hence, once the zero-rate band has been determined, tax brackets and tax rates are applied to it in order to determine the level of the tax reduction.

A third step is to determine how the revenue of the personal income tax is shared between the federal government and the regions. The autonomy factor is the share of tax revenues to which the regions are entitled. A last step is to determine the level of local taxes. Local taxes are equal to a fixed proportion of personal income tax.

Basic rate structure

Income brackets

Choose the income cutoffs to specify the income brackets to apply the progressive rate structure of the personal income tax

Cut off 1 (First income bracket from 0 to cut off 1)

Cut off 2 Second income bracket from cut off 1 to cut off 2)

Cut off 3 (Third income bracket from cut off 2 to cut off 3, fourth from cut off 4 to infinity)

WARNING: cut offs must be in increasing order!

Tax rates

Choose the tax rates applied to the different taxable income brackets

Tax rate first income bracket

Tax rate second income bracket

Tax rate third income bracket

Tax rate fourth income bracket

Additional bracket

Do you want to define an additional income tax bracket?

Click if you want to implement an additional tax bracket

Cut off 4 (Fourth income bracket from cut off 3 to cut off 4, fifth income bracket all incomes above cut off 4)

WARNING: Cut off 4 cannot be below cut off 3!

Tax rate additional (fifth) income bracket

Other income sources

Tax rate on other income sources

Tax rate on other income

Zero rate band tax reduction

Basic zero-rate band

Choose the amounts constituting the baseline zero rate band for a an adult

Basic zero rate band

Basic zero rate band for low income individuals

Income threshold to be entitled to full increased zero rate band

Income threshold to be entitled to partial increased zero rate band

WARNING: choose income threshold for partial increased zero band higher than or equal to income threshold for full increase in zero rate band

Dependent children

Choose the additional zero rate band for dependent children

Additional zero rate band for first dependent child

Additional zero rate band for second dependent child

Additional zero rate band for third dependent child

Additional zero rate band for fourth dependent child

Additional zero rate band for each additional dependent above 4

Single parenthood

Additional zero rate band for single parent households

Additional zero rate band for single parent household

Extra additional zero rate band for low income single parent households

Income threshold to be entitled to full additional zero rate band for low income single parent housholds

Income threshold to be entitled to partial additional zero rate band for low income single parent housholds

Minimal income to be eligible for additional zero rate band for low income single parent households

Income brackets

Choose the income cutoffs to specify the income brackets in order to calculate the amount of the tax reduction for the zero rate band. This calculation is equivalent to the application of the progressive rate structure, but since tax year 2017, one applies different tax brackets and marginal tax rates than for the main application of the progressive rate structure.

Cut off 1 (First income bracket from 0 to cut off 1)

Cut off 2 Second income bracket from cut off 1 to cut off 2)

Cut off 3 (Third income bracket from cut off 2 to cut off 3)

Cut off 4 (Fourth income bracket from cut off 3 to cut off 4, fifth from cut off 4 to infinity)

WARNING: cut offs must be in increasing order!

Tax rates

Choose the tax rates applied to taxable income brackets to calculate the tax reduction for the zero rate band

Tax rate first income bracket

Tax rate second income bracket

Tax rate third income bracket

Tax rate fourth income bracket

State tax & federal and regional PIT & federal, regional and local elements

Choose autonomy factor

Municipal surcharges

VAT and Social Security Contributions

VAT

Companies can choose between 3 different ways to the VAT deductible related to company cars. CoCaTax will compare these 3 ways for each company car, and assume that a company has chosen the most profitable option to reclaim VAT expenses.

The 3 ways to compute the percentage of VAT on company cars that can be deducted are the following

Actual professional use

100 X (Total Km's * home-work distance (x2) x 200 days * private Km's)/Total Km's = percentage VAT reduction

Semi-fixed calculation method

100 X (1 * [(200 days x home-work distance x 2) + forfait private Km's]/Total km's on yearly basis)

Lump sum VAT reduction

A given percentage of the VAT expenditure

Companies can compare these three ways to compute the VAT deductible and choose the most profitable way. However, the percentage of the VAT deductible resulting from the first two ways of calculating the VAT deductible cannot exceed a legally fixed maximum percentage.

Choose the general VAT rate applicable to company car related expenses (car, maintenance, fuel...)

VAT rate

Choose percentage of VAT that is deductible in the lump sum calculation

Percentage of lump sum VAT deduction

Choose the maximal percentage of VAT that is deductible when using the first two deductible calculation methods

Deductible percentage cap

Choose the forfait number of private kilometers in the second calculation method

Forfait private kilometers

Social Security Contributions & Company cars

For social contributions, it is important to make the distinction between workers and company managers.

Workers are subject to both employer and employee social contributions. Employer social contributions are computed according to the formula displayed below:

Employer social contributions = Employer rate x (Gross wage + Mobility budget in cash)

Employee social contributions are computed similarly, but using the employee rate. Workers that are provided with a company car are also subject to a solidarity contribution ('CO2 contribution'), paid by the employer:

CO2 contribution = (max (CO2 emissions x CO2 coefficient - Reduction, Minimum contribution)) x index

The level of the reduction is different for each fuel type. For electric vehicles, the CO2 contribution is equal to the product of the minimum contribution and the index. Note that CO2 emissions are expressed in g/km.

For company managers, brackets and rates are applied to the gross wage in order to determine the level of social contributions. Note that there are three brackets. If the gross wage falls below a minimum amount, social contributions are computed as if the gross wage were equal to this minimum amount.

Choose the social security contribution rate for employees

Worker contribution rate

Employer contribution rate

Choose the parameters for the social security contribution of the self-employed

Choose the minimal income on which self-employed must pay social security contributions

Minimal income for constribution self-employed

Choose the 2 cut-offs for the rate structure of the social security contributions for the self-employed

Cut-off 1 for constribution rate self-employed

Cut-off 2 for constribution rate self-employed

Choose the 3 social security contribution rates for the self-employed

Social security constribution rate self-employed: bracket 1

Social security constribution rate self-employed: bracket 2

Social security constribution rate self-employed: bracket 3

Choose the special social security contributions (CO2 contribution) for company cars

Baseline CO2 contribution

CO2 contribution diesel

CO2 contribution gasoline

CO2 contribution lpg

CO2 contribution cng

Minimal amount of solidarity contribution on monthly basis

Corporate income tax

Corporate income is taxed at a certain rate. This version of CoCaTax assumes one single tax rate, and does not take into account lower tax rates for a lowest income brackets of small firms etc. The corporate income tax rate is applied to the tax base, the corporate income, but companies can deduct a percentage of the costs related to company cars from their taxable income, and this deductibility rate depends on the fuel type and CO2 emissions of the company car. The second column shows a table with the different categories of company cars, and the sliders next to it allow you to fix a deductibility rate for each category. After this, a percentage of the fringe benefits given to the employee must be added again to the company's taxable income. The rates at which this fringe benefit must be added again to the tax base can be chosen in the rightmost column.

Choose the corporate tax rate applied to corporate income

Corporate income tax rate

Category	CO2 emissions Diesel (g/km)	CO2 emisions gasoline (g/km)
1	0-60	0-60
2	61-105	61-105
3	106-115	106-125
4	116-145	126-155
5	146-170	156-180
6	171-195	181-205
7	above 195 or unkown	above 205 or unknown

Choose the deductibility rate of fuel expenses

Deductibility rate fuel

Choose deductibility rates different categoies of vehicles

Deductibility rate electric vehicles (0 g/km CO2 emissions)

Deductibility rate vehicles category 1

Deductibility rate vehicles category 2

Deductibility rate vehicles category 3

Deductibility rate vehicles category 4

Deductibility rate vehicles category 5

Deductibility rate vehicles category 6

Deductibility rate vehicles category 7

A percentage of the fringe benefits must be re-added to taxable corporate income: the non-authorized expenses. We distinguish between a company car and a company car with fuel card

Percentage non-authorized expenses: company car only

Percentage non-authorized expenses: company car with fuel card

Households' Disposable Income

Change in general disposable income (monetary income and fringe benefits)

Fiscal and Parafiscal Revenue

Average difference in individual contributions per category of fiscal and parafiscal revenue. (Note: positive = increase in average contributions after reform)

Difference in average contribution by government level

Difference in average contribution by instrument

Socio-economic Inequality

Inequality in general disposable income (monetary income and fringe benefits)

Inequality Measures

Poverty Measures

Labour Costs: Tax Wedge

The tax wedge is defined as the relative difference between the total labour cost for the employer and the disposable income for the employee: (total labour cost-disposable income)/total labour cost

Change in disposable income in function of socio-demographics

This page displays the change in disposable income (monetary and in-kind) in function of various socio-demographic variables.

Violin plots

: the violin plots depict for each socio-demographic category the density function of changes in disposable income. The white mark indicates the average change in disposable income for this socio-demographic category.

Scatter plots

: the scatter plots indicate for each level of age or commuting distance (horizontal axis) the change in disposable income. The color of each dot indicates use of a company car. For each group, a trendline indicates the overall relation between the variable on the horizontal axis and the change in disposable income due to the reform.

Education and economic sector

Gender and household composition

Region and age

Mobility: engine type and commuting distance

Education and economic sector: individuals handing in company car

Gender and household composition: individuals handing in company car

Region and age: individuals handing in company car

Mobility: engine type and commuting distance: individuals handing in company car

Inequality and poverty

Concentration curves of market incomes, disposable incomes and paid taxes

The following two graphs show the concentration curves for the market incomes, disposable incomes and paid taxes, before and after the reform.

For market incomes, e.g., the concentration curve (Lorenz curve) depicts for each percentage x of the population (horizontal axis), what percentage of total market income is received by the x% of the population with the lowest market incomes. In case of a perfectly equal income distribution, this curve coincides with the dotted diagonal. The further the curve lies from the diagonal, the more unequal the income distribution.

The Reynolds-Smolensky index measures the distribution realized by the fiscal system, and equals the area between the concentration curves of disposable income and market income (i.e., how much more equal is the income distribution after taxes than before taxes).

The Kakwani index measures the progressivity of the fiscal system, and equal the area between the concentration curves of market incomes and paid taxes (how much more are taxes concentrated on the higher incomes).

Change in disposable income of the poor

The two graphs below display the change in disposable income for individuals that were poor before the reform, i.e., with a disposable income below 60% of the median income.

Labour costs

This page displays in more detail the (change in) labour costs. The graphs below display the following information

The change in tax wedge (vertical axis) in function of disposable income (horizontal axis). The tax wedge is the relative difference between the total labour cost for the employer and the disposable income for the employee.

A decomposition of the average labour cost (entire population) in different cost components.

A decomposition of the average labour cost per income decile in different cost components. We rank the population in terms of disposable income, and divide the population in 10 equal parts. The first decile then collects the 10% of individuals with the lowest disposable incomes, the second decile the next 10% etc. The graphs the decompose the average labour cost for each income decile.

Changes in the tax wedge, in function of disposable income

Decomposition labour costs: population average

Decomposition labour costs in function of disposable income decile

Tax and social security revenues

This page shows the impact of the reforms that are simulated in CoCaTax on tax and social security revenues.

The first graph on the left-hand side gives, for each level of government (federal, regional and local), the variation of tax revenue. A decomposition is made between personal income tax, corporate income tax and value-added tax. The amounts are expressed in euros per individual within the sample.

The first graph on the right-hand side shows, for both workers (ONSS) and company managers (INASTI), the average impact of reforms on social contributions. For workers, a distinction is made between employee, employer and solidarity social contributions.

The other graphs show how the impact of taxes and social contributions varies across income deciles.

Disposable income, taxes and social contributions

This page displays the impact of the reforms that are simulated in CoCaTax on disposable personal income, taxes and social contributions (expressed in euros per individual in the sample) for four categories of individuals:

company car holders that do not switch to a mobility allowance or a mobility budget (meaning that individuals that get a company car through the mobility budget are NOT in this category);

mobility allowance beneficiaries;

mobility budget beneficiaries;

other individuals (this category might include fuel card holders).

To show the results of the simulation, we use violin plots, which contain information on the distribution of individuals. The white dots represent the average of the distribution.

Some clarifications need to be made:

disposable personal income includes non-monetary forms of income (such as company cars, fuel cards and sustainable means of transport);

both employee and employer social contributions are considered;

for corporate income tax, we focus our analysis on the deduction of labour and vehicle, fuel and related costs.

Fringe benefits

This page shows the value of different types of fringe benefits (company car, mobility allowance and mobility budget) and to what extent they are subject to a favourable fiscal treatment.

The graph on the left-hand side gives the average value of each type of fringe benefit. The amounts are expressed in euros per beneficiary of a particular fringe benefit. A more precise decomposition is also made for each fringe benefit category:

for company car holders that do not switch to a mobility allowance or a mobility budget (first category), a distinction is made between the value of the company car and the value of the fuel card;

mobility allowance beneficiaries (second category) are entirely paid in cash;

for mobility budget beneficiaries (third category), a distinction is made between the company car, the fuel card, the provision of sustainable means of transport and the residual paiement in cash.

The graph on the right-hand side shows the share of taxable fringe benefits for company cars holders as well as mobility allowance and mobility budget beneficiaries.

Financial impact of the simulated scenario for cash for car and mobility budget beneficiaries

The graphs below display the AVERAGE financial impact of the simulated scenario for cash for car and mobility budget beneficiaries compared to a situation without any policy reform. The impact is presented for both taxation and social contributions.

On the taxation side, the simulated scenario can affect personal and corporate income as well as value-added taxation.

On the social security side, a distinction needs to be made between company managers (who contribute for INASTI) and workers (who contribute for ONSS). Only the later have to pay (through the employer) the solidarity contribution when being provided with a company car.

Cash for car beneficiaries

Mobility budget beneficiaries

User Manual

Read the CoCaTax user manual for a more in depth description of the different components of CoCatax as well as for getting started with the online interface.

Click here

Version Release Notes

For more technical background information on the current release of CoCaTax (data used, data matching details, what is in and what is not...), read the release note HERE.

Coming soon!

Papers and Publications

Grandjean, G., Speth, C., Truyts, T. and Vanrykel, F. (2019) 'Reforming the fiscal treatment of company cars: the CoCaTax micro-simulation model'

Click here

Authors

CoCaTax was written by Gilles Grandjean, Christophe Speth and Tom Truyts. All authors are economists at the Center for Research in Economics (CEREC) of the Université Saint-Louis - Bruxelles

Contact

or at:

CEREC (CoCaTax), Université Saint-Louis - Bruxelles, Boulevard du Jardin botanique 43, 1000 Brussels, Belgium